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Income Tax Appellate Tribunal, “E”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A), Mumbai, dated 12-9-2011, for the assessment year 2007-2008, wherein following grounds have been taken by the assessee :- 1) The Hon. CIT (Appeal) -3 has not considered the view of the assessee that the expenditure amounting to Rs 12,18, 847/- was incurred in respect of the hiring of equipments, locations, sets and others appropriately. The Hon. CIT (Appeal) -3 has held that these expenses were the result of contracts and hence were covered by Section 194C ignoring the fact that the said expenses were the result of arrangements for hiring of equipments, locations, sets and others & not of the contracts. 2) The Hon. CIT (Appeal) -3 has erred in considering the factual status as that of equipment hire charges, hire charges, location hire charges, set expenses & other hire charges as that of "Contracts" & thereby contravening the provisions contained in the CBDT Circular
2. No. 681 dated 08/03/1994 generally & the stipulations contained in Para 7(iii) of Circular No. 681 specifically. 3) Although the expenditure on equipment hire charges, hire charges, location hire charges, set expenses & other hire charges paid by the assessee during A. Y. 2006-07 is in the nature of "Rent", the same have not been accordingly considered for the purposes of application of provisions of Section 1941. The term" Rent" as per the explanation (i) to second proviso to Section 1941 which reads as follows:- " Rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy, or any other agreement or arrangement for the use of (either separately or together) any,- . i) land; or ii) building (including factory building); or iii)land appurtenant to a building (including factory building); or iv) machinery v) plant; or vi) equipment; or vii) furniture; or viii) fittings, whether or not any or all of the above are owned by the payee; The Hon. CIT (Appeal)-3 has erred in not referring to the above stated definition, due to which the erroneous implications have arisen resulting in the disallowance U/S 40. (a) (ia). The Hon. CIT (Appeal)-3 has erred in holding the payments amounting to Rs 12,18,847/- to be in the nature of "Contract" or "Work". The definitions of the terms "Contract" & "Work" are as follows :- i) "Contract":- "Contract" shall include sub-contract" ii) "Work" :- "work" shall include- a) advertising b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; c) carriage of goods or passengers by any mode of transport other than by railways; d) catering; e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer; 3 but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such a customer. It is implied from the order of the Hon. CIT (Appeal)-3 that the transactions in question are erroneously held to be covered by above definitions, whereas the same were as that of hiring covered u/s 1941. 5) Due to inaccurate applications of the relevant definitions & provisions of the Income Tax Act, 1961 injustice is caused to the assessee in terms of:- i) The disallowance of Rs 12, 18,847/- u/s 40 (a) (ia) & ii) Imposition of the tax on the same amount of income twice by the Revenue.”
Rival contentions have been heard and record perused. Facts in brief are that the assessee is a proprietor of M/s Magik Lantern Films and engaged in the business of Ad Film making and other film production. During the course of scrutiny assessment the AO noted that following expenses so incurred by assessee were contractual liability of the assessee, however, no tax was deducted at source u/s.194C by the assessee.